The operation of a CPG isn’t an easy job. Between managing the cost of production distribution relationships, as well as marketing, keeping profits in check can be an uphill battle. What if we told you that your bottom line wasn’t at risk from rising costs of materials or tough competitors, but by the deductions which slowly reduce your income.
It’s not the most thrilling aspect of managing an CPG brand However, deduction management is among the most crucial. When a retailer underpays an account because of chargebacks (or other reasons) or promotions, or if there are any vague issues with compliance, it can reduce your profit. These deductions are especially important in times when cash flow has been in a tight spot.
The real Cost of Poor Deduction Management
There’s no way to be honest: nobody launches a CPG brand expecting to spend time fighting over deductions with distributors. These deductions aren’t small for businessmen, as many learn.
If you do not have a good deduction management system, your business will always feel like it’s losing money. It is frustrating, time-consuming and, perhaps most important of all, it diverts your attention from the most important thing: growing your business.
What makes it even more challenging is the lack of transparency. The explanations for many deductions aren’t clear and it can be difficult to determine which are right. Many brands are unaware of how much they’re losing until they have a look at their financial records. By then they could have lost hundreds of thousands (or millions).
How Software for Deduction Management Changes the Game
The good news You don’t have to tackle this issue manually. Deduction management software helps take the guesswork out of the process by automatically tracking, analyzing, and the resolution of deductions.
Businesses are now able to see where their money goes and how deductions have been made without the need for sifting through spreadsheets. Better yet, software solutions enable brands to contest incorrect claims more quickly in order to reduce time and recouping revenue faster.
Automation is a way to reduce human error, and a higher level of precision when it comes to financial reporting. If you own an CPG this type of transparency gives you the confidence to grow and put money into your business and deal with retailers.
Food & Beverage Consultancy: A Key to Profitability
Software is an amazing tool, but occasionally you’ll need someone to guide you. That’s where a food & beverage consultant comes in.
Consultants with experience in the field of food industry consultation can help CPG brands implement smarter deduction management strategies, train teams on best practices, and even negotiate better deals with distributors. They are familiar with the industry inside-out and can offer insights that would otherwise require years of research to find.
For businesses that are growing, expert guidance can make the difference between fighting endless deductor disputes or turning the process of deduction management into an efficient and profitable process.
Final Thoughts
At the end of the day deduction management doesn’t have to be just about finding lost money it’s about ensuring the financial health of your business. It doesn’t matter if it’s via deduction management software or working with a food & beverage expert, taking control of your deductions is taking control of your cash flow, your expansion, and even your future.
Instead of delaying deductions that drain your profits, take charge of the process and turn the problem that was once a burden into an opportunity for business growth. Your profits will be a lot better.